Deutsche Bank Avoids Dodd-Frank Rule

3/22/2012 11:58AM

Deutsche Bank AG changed the legal structure of its huge U.S. subsidiary to shield it from new regulations that would have required the German bank to pump new capital into the U.S. arm, David Enrich reports on Markets Hub. (Photo: Daniel Roland/AFP/Getty Images)

This transcript has been automatically generated and may not be 100% accurate.

... I ... lead to banking ... Deutsche Bank is and on the summit of the US and other European banks that the U S operations and it is ... this leaves restructure its operations team to the legal status of that ... so they're no longer ... found ... in the same way that they would buy the new Dodd Frank was a bit so it's it's restrictions business in a way that will allow it to avoid having to pump them ... and tens of billions in cap so that this is ... something that some some of the customers and covers him some of ... us read this know what what's the latest on that nor the accepting this or ... know what's next ... well the regulators in the primary regulator of dough which a bank and other banks like Barclays is the Federal Reserve ... the Fed's approach to this is basically a hands off approach they don't ... they don't have the right to veto this is not up to them it's up to the banks themselves ... they certainly aren't objecting but we're hearing some criticism from other ... elements of the U S regulatory apparatus and Sheila Bair who until recently was the head of the FDIC ... is saying very upset about this thing it's a and if ... you will do as I heard some people some words with Sheila Bair viewed as ... the perfect read three is an attempt to sidestep ... the intent of these rules ... on BP's me this song call me crazy and imprison ... to me ... this is a good thing in this bank unit was thinly capitalized ... did was unjustly a string of bank but we think the banks that they are no longer classified as a bank of them along to happen to those rules ... if something goes down doesn't that put them on the outskirts of what might be bailed out by United States government ... much in my mind that did it ... well it didn't make that aim to ... keep in mind that the entities years or top of the snow longer check in with us but as a bank is going to bank's investment banking arm of the US which as ... and so it's difficult capital markets and is also the biggest players in the derivatives market so ... that the ability for it in and to be like the weather starts as a bank or us but something else the ability of that entity to inflict serious economic and financial damage of the country working in trouble it's pretty in or it's pretty hard to understate so ... the mere fact that is technically not a bank doesn't necessarily ... mean that would give the that that that the Fed and the attributes of a direct line of this argument that ... if ... the U S operations of Deutsche Bank to drop by the source of strength on the parent company in Frankfurt Germany ... and there's a lot better I mean that the the the Georgia Big AG in Germany as you know tens of billions made hundreds of billions of years Capital disposal ... a lot of people are skeptical with Sheila Bair skeptical that it ... in a crunch whether the German company with the surly ... rush to the rescue the troubled American subsidiary ... something that ... we have we seen this with other European banks with the U S operations was ... published a road map beforehand and you know what had been results ... in a sense that ... we see as Italy's what other bank which is the Ripley's which did this about the dual more than a year ago with its US operations with Evans he had only ... a small handful ... of every four or five other ... sizable European banks similar structures nears ... they might do this so we haven't seen other examples of that I think people are ... watching closely to see ... what they did in terms of the effect it's really hard to tell the not for those of transparency ... from the Fed or the other regulators to certainly not the banks themselves about how this actually impacts ... or affects the day-to-day operations of the day to day oversight that both of these banks